SME owners warn it will be ‘difficult’ to implement new employee day-one rights – London Business News | Londonlovesbusiness.com

A new survey has found that nearly eight in 10 (78%) SMEs in the UK believe it will be ‘difficult’ to implement the day-one rights set to be introduced by Labour under its Employment Rights Bill, while only one in five (19%) say they have the in-house HR expertise and systems necessary to navigate the changes confidently and compliantly.

The survey of 140,000 small business owners across all major industries in the UK was conducted by BrightHR, a leading global provider of HR and health & safety software and employment law advisory services.

Respondents were asked various questions relating to their awareness of and preparedness for the 60+ employment law reforms proposed by Labour under of its ‘Plan to Make Work Pay’, including new day-one rights to flexible working, statutory sick pay (SSP), and protection from unfair dismissal.

The results reveal a lack of knowledge and confidence among small business owners about their ability to comply with the proposed employment law reforms, with nearly nine in 10 (88%) of those surveyed saying they had concerns about implementing the legislation and over one in eight (12%) reporting a lack of knowledge about which HR policies, processes, and documentation they will need to update to stay compliant.

Other key findings:

• Awareness: 35% of business owners are unaware of the changes being proposed by Labour, with a further 48% unaware of the employment law risks associated with the proposed changes
• Confidence in current operations: 42% of business owners are not confident that their HR policies and procedures are compliant with existing employment law regulations
• Confidence to implement changes needed: Only 12% of business owners report they know what to change, in terms of their operations, policies, and processes, if Labour’s proposed changes come into effect
• Readiness to implement changes needed: Only 19% of business owners report that they are wholly equipped to make the policy and procedure changes needed to adapt to the proposed reforms, with 36% unsure or unequipped
• Concerns about new day-one rights: 78% of small business owners believe it will be difficult to implement new day-one rights, including the right to be protected from unfair dismissal from day one of employment

Other statistics from the research show that:

• 60% of business owners are likely or highly likely to seek expert advice in understanding and implementing the proposed changes, but only 23% are currently accessing third-party support to prepare for legislative change
• 57% of business owners are monitoring the news and reading information online to prepare for the proposed legislative changes
• 42% of business owners cite their biggest concern as the time it will take to implement the changes

Alan Price, CEO at BrightHR, said, “SMEs are understandably concerned about the many new HR requirements they will need to adhere to when the Employment Rights Bill comes into effect.

“While we do not know the exact shape this legislation will take until it is tabled in Parliament next month, we can expect to see a significant expansion of worker rights and protections, including the removal of the two-year qualifying period for unfair dismissal protection, a default right to flexible working, and a ban on ‘exploitative’ zero-hour contracts.

“Unlike larger employers, SMEs have fewer resources and less in-house HR expertise to navigate these employment law changes confidently and compliantly, which is concerning given the sheer depth and breadth of the reforms that Labour is planning to introduce.

“Small business owners are particularly concerned about the new day-one rights that employees will likely be entitled to under the Employment Rights Bill, particularly the right to be protected from unfair dismissal from day one of employment, rather than after the current two-year qualifying period.

“These changes will not only demand an overhaul of existing HR policies, processes, and documents; they will also require a significant investment of time and resource to make sure they are implemented correctly.”

Lucy Cobb, Employment Law Specialist and Advice Operations Manager at BrightHR, added, “Getting employment law wrong can be incredibly costly, leaving businesses at risk of tribunal claims, legal fees, and reputational damage.

“Without access to in-house HR teams, small business owners in particular will need to stay alert to the legal changes on the horizon and ensure they have the correct policies, procedures and documentation in place when the new legislation comes into effect.

“I would advise business owners to seek expert legal support if they are unsure about what they will need to change in their business to stay compliant.

“Expert advisors can help business owners determine exactly what they will need to do to ensure their policies and processes are compliant with new laws as and when they come into effect, while comprehensive HR software like BrightHR can provide them with the tools, software support and document templates they will need to adjust their operations efficiently and compliantly.”